The US Energy Information Administration lowered on Tuesday its oil demand outlook for 2019 to 1 million barrels per day, according to Reuters.
The forecast comes on top of an oil market that already fears a slowing demand for crude.
The EIA cut its 2019 oil demand growth forecast by 70,000 bpd. Its 2020 forecast for global demand growth increased, however, by 30,000 bpd to 1.43 million barrels per day.
Oil was trading down again on Wednesday as the China/US trade war escalations hint at a slowing economy, which would dent oil demand. WTI was trading at $51.66 (-3.67%), while Brent crude was trading at $57.10 (-3.12%)—below the psychologically important $60 threshold. Today’s falling prices add to yesterday’s decline, which were off 3% as demand fears set in with China allowing its yuan to be devalued.
China’s oil demand growth makes up a fair amount of the global oil demand growth, so a slowdown in China’s consumption—or even the hint of one—is capable of depressing prices.
The IEA shares the EIA’s grim view of oil demand growth, forecasting a couple weeks ago that the oil demand growth would come in at 1.1 million bpd for 2019, in light of the trade dispute between the United States and China.
Lower prices at a time when OPEC is still curbing production, oil tankers are being seized near the Strait of Hormuz, and foreign countries are sending warships to protect their vessels are practically unheard of—but a global slowdown in demand growth and higher global oil inventories are more than offsetting supply fears.
The API is reported a draw in crude oil inventories this afternoon, but the bullish news could lift the sentiment on Tuesday, and prices continued to slide after the EIA reported a surprise build in commercial crude inventories on Wednesday morning.
By Julianne Geiger for Oilprice.com
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